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Self-Storage REITs Release Financial Results for First-Quarter 2017

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The five largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Life Storage Inc., National Storage Affiliates Trust and Public Storage Inc.—have released financial statements for the quarter that ended March 31, 2017. In general, all five entities showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy.

"Solid first quarter results have us well-positioned as we enter the high-volume spring and summer rental season," said Christopher P. Marr, president and CEO of CubeSmart, noting the REIT’s managed portfolio increased 12.7 percent during the quarter. “We remain focused on maximizing property level cash flow through operational excellence and disciplined capital allocation."

Joseph D. Margolis, CEO of Extra Space Storage, expressed similar sentiments regarding the REIT’s performance. "We started the year with an excellent first quarter,” he said. “We experienced the benefits of a highly diversified portfolio with certain markets accelerating, while others moderated.”

CubeSmart

CubeSmart reported FFO per share of $0.36 during the quarter, a 12.5 percent year-over-year increase. Same-store NOI at its 432 facilities grew 6 percent year over year. The company attributed this to a 5.4 percent growth in revenue and a 4.1 percent increase in property operating expenses. Same-store locations contributed 93 percent of the REIT’s property NOI during the quarter.

The operation gained 50 basis points in physical occupancy compared with the same quarter the previous year. The same-store physical occupancy was 92.7 percent as of March 31. The company’s total-owned portfolio, representing 476 facilities and comprising 32.9 million square feet of rentable space, had a physical occupancy of 90.7 percent at the end of the first quarter.

CubeSmart opened one wholly owned storage facility in North Palm Beach, Fla., during the quarter behind a total investment of $9.7 million. The REIT didn’t acquire any storage facilities during the three-month period but has two properties under contract for $22 million, four properties under contract to purchase at certificate of occupancy for $61.1 million, and one wholly owned and six joint-venture projects under development.

On Feb. 14, the company declared a dividend of 27 cents per common share, which was equal to the dividend issued the previous quarter. The dividend was paid on April 17 to common shareholders of record on April 3.

CubeSmart owns or manages 832 self-storage facilities across the United States. Its operating portfolio comprises 55.9 million square feet.

Extra Space Storage Inc.

Same-store revenue increased 5.8 percent and NOI rose 9.2 percent compared to the same period in 2016. FFO was $1.03 per diluted share, resulting in 19.8 percent growth compared to the first quarter the previous year.

Same-store occupancy was 92.2 percent as of March 31, which was a 0.88 percent increase compared to the same period in 2016.

During the quarter, the company acquired two wholly owned facilities for approximately $25.5 million. It also acquired two facilities at the completion of construction through joint ventures for about $16.2 million.

The company paid a quarterly dividend of 78 cents per common share, which was equal to the previous quarter. It was paid on March 31 to common shareholders of record on March 15.

Headquartered in Salt Lake City, Extra Space owns or operates 1,441 self-storage properties in 38 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 980,000 units and 109 million square feet of rentable space.

Life Storage Inc. (Formerly Sovran Self Storage Inc.)

Total revenue increased 29.5 percent over the previous year, while operating costs increased 32.4 percent, resulting in an NOI increase of 28 percent. Same-store NOI increased 3.2 percent year over year. FFO for the quarter was $1.26 per fully diluted common share, compared to $1.16 for the same period in 2016. Adjusted FFO was $1.26, a 3.3 percent increase.

Net income attributable to common shareholders for the first quarter was $20.4 million, or $0.44 per fully diluted share. For the same period in 2016, net income attributable to common shareholders was $28.3 million, or 73 cents per fully diluted common share.

Revenue for the company’s 435 wholly owned facilities increased 3.2 percent year over year, helped by an increase in average occupancy of 20 basis points and a 2.7 percent increase in rental rates and other income. Average overall occupancy for the quarter was 90.9 percent, with units renting for an average of $13.23 per square foot.

The REIT acquired one property during the quarter in Chicago at certificate of occupancy for $10.1 million. It comprises 78,000 square feet. Five additional properties were acquired by two of the company’s joint ventures for $135.5 million. Four of the facilities are in California and one is in New York. Life Storage contributed $19.8 million toward the transactions.

Subsequent to the end of the quarter, the company approved a quarterly dividend of $1 per common share, which is a 5.3 percent increase compared to the previous quarter.

The company also announced that all but seven of its owned and managed facilities are operating under the Life Storage name. The overall cost of its rebranding project was less than the projected $22 million, according to company officials.

Based in Buffalo, N.Y., Life Storage operates 675 self-storage facilities in 29 states under the Life Storage and Uncle Bob’s brands. Its portfolio of owned and managed facilities comprises more than 45 million square feet.

National Storage Affiliates Trust (NSAT)

Core FFO per share was $0.29 during the first quarter, a 16 percent year-over-year increase. Its net income was $7.2 million during the quarter, a 50 percent gain compared to the $4.8 million it reported for the same period in 2016. Same-store NOI was $28.1 million, up 9.1 percent.

Same-store revenue was $41.2 million during the quarter, a 6.6 percent increase from a year ago. This was driven by a 6.9 percent increase in average annualized rental revenue per occupied square foot. Average occupancy was 88.3 percent as of March 31, down from 88.7 percent last year. Same-store average occupancy was 88.7 percent, which was equal to the same period last year.

The company acquired five self-storage properties during the quarter for $31.9 million. The facilities are in five states and comprise about 300,000 rentable square feet in more than 2,200 units. NSAT also completed the addition of Orlando, Fla.-based Personal Mini Storage as its eighth participating regional operator.

On Feb. 23, the company declared a quarterly dividend of $0.24 per common share, which was paid on March 30 to holders of record on March 15.

Headquartered in Greenwood, Colo., NSAT is a self-administered and -managed REIT focused on the acquisition, operation and ownership of self-storage properties within the top 100 U.S. Metropolitan Statistical Areas throughout the United States. The company has ownership interest in 456 storage facilities in 23 states. Its portfolio comprises approximately 28 million net rentable square feet. It's owned by its affiliate operators, who are contributing their interests in their self-storage assets over the next few years as their current mortgage debt matures.

Public Storage Inc.

Revenue for same-store facilities increased 4 percent, or $20.9 million, in the quarter, as compared to the same period in 2016, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities increased 3.9 percent, or $5.7 million, during the period compared to the previous year.

FFO was $2.34 per diluted common share, compared to $2.10 for the same period the previous year. NOI increased $21.1 million compared to the same period in 2016, including $15.2 million for same-store facilities.

The company acquired four self-storage facilities during the quarter for $23 million. The properties are in Minnesota, New York, North Carolina and Ohio. Together they comprise 200,000 net rentable square feet. It also completed two new development and various expansion projects that added 500,000 net rentable square feet to its portfolio for $89 million.

The company reported a regular common quarterly dividend of $2 per common share, which was equal to the previous quarter. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on June 29 to shareholders of record as of June 14.

Based in Glendale, Calif., Public Storage has interests in 2,354 self-storage facilities in 38 states, with approximately 155 million net rentable square feet. Operating under the Shurgard brand name, the company also has 220 facilities in seven European countries, with approximately 12 million net rentable square feet.

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